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Supreme Court Won’t Take Up Washington Capital Gains Tax Challenge

Opponents had argued it was a tax on income, and thus barred by Washington's state constitution.

By Claire Withycombe, The Seattle Times (TNS)

The U.S. Supreme Court said Tuesday it would not review Quinn v. Washington, the lawsuit challenging Washington’s capital gains tax.

The Legislature passed the tax in 2021 and payments first came due in April 2023. It’s a 7% tax on profits gained from the sale or exchange of stocks, bonds and other investments or tangible assets above $250,000.

The tax brought in almost $900 million in revenue in its first year.

Opponents had argued it was a tax on income, and thus barred by Washington’s state constitution.

Supporters of the tax celebrated the milestone. Treasure Mackley, executive director of Invest in WA Now, which backs the capital gains tax, said the decision was “a huge victory for Washington kids and families.”

“This decision could not have come at a more critical time as school districts across the state are facing funding shortfalls,” Mackley said in a statement.

Opponents of the tax had brought a lawsuit challenging it to the nation’s highest court after the Washington Supreme Court upheld it 7-2 in March, saying it was an excise tax and therefore constitutional.

The U.S. Supreme Court declining to hear the case is not the last hurdle the new tax could face—it could be on the ballot in the fall, as a conservative group has filed a petition to repeal it.

“We always knew the odds were long, but we remain disappointed the U.S. Supreme Court did not take the opportunity to correct the flawed direction of our state,” Michael Gallagher, president and CEO of the Washington Policy Center, a conservative think tank, said in a statement. “The good news is that over 400,000 Washington citizens have already seen the damage this tax has done and raised their voices to fellow citizens.”


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